Until a few weeks ago, I plodded along with my trusty usually working Dell mp3 player, which handled most of my portable music needs for the last eighteen months. It didn’t play Audible audiobooks and I’d begun to push the 20 gigabyte storage capacity, but I didn’t want to spend money for a new player. Those issues grew until I decided to upgrade to a new, not-iPod mp3 player. I saw zero reason to upgrade by spending $100 more on an iPod than on any other comparable player. After some research, I purchased a new player. When I heard the sound quality, I returned it. I researched the market a bit more, finally deciding that I’d risk the iPod’s extra expense once, just to understand the fuss. Three weeks ago, I bought an iPod. Today I’m a believer.
Now that I have an iPod, I’ve discovered the joy of iTunes, if obsessively spending 99 cents every day (or every few minutes) can be considered a joy. (Here’s a hint: It can be.) It offers the convenience of downloading individual songs that I discovered six years ago when Napster first made its appearance. If I hear a song I like, such as Alphaville’s “Forever Young”, but realize that it’s the group’s only song I like, I can pay 99 cents instead of $10. It’s amazing, but you knew that already.
I mention this back story to lead into a discussion of this article about Steve Jobs, Apple, and an impending battle within the downloadable music industry. Consider:
Two and a half years after the music business lined up behind the chief executive of Apple, Steven P. Jobs, and hailed him and his iTunes music service for breathing life into music sales, the industry’s allegiance to Mr. Jobs has eroded sharply.
Mr. Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service.
If he loses, the one-price model that iTunes has adopted – 99 cents to download any song – could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents.
Can the music companies be that stupid? That’s rhetorical because it’s the same industry that fought downloadable music for years, choosing to sue its customers instead of altering the product to meet their changing demands. Apple has already sold more than 500,000,000 songs, but consumers paying for downloads is still in its infancy. The “training” that record companies should’ve done five years ago is just beginning. The rules shouldn’t change yet. And yet, this is the logic of one record company:
Andrew Lack, the chief executive of Sony BMG, discussed the state of the overall digital market at a media and technology conference three months ago and said that Mr. Jobs “has got two revenue streams: one from our music and one from the sale of his iPods.”
“I’ve got one revenue stream,” Mr. Lack said, joking that it would require a medical professional to locate. “It’s not pretty.”
It’s not Mr. Jobs’s fault that Sony BMG can’t figure out how to diversify its business. That assumes that Apple screws the record companies with each sale, which isn’t true because the record companies earn approximately 70 cents per song. I haven’t verified the cost structure, but that seems impressive when assuming that Apple bears the costs of operating iTunes.
The other aspect of the impending battle involves Apple’s closed standards for the iPod and iTunes. Currently, users must burn songs purchased through iTunes onto blank discs before transferring the songs to a player other than an iPod. I encountered that tedious procedure, which is why I bought only a few songs before I purchased an iPod. Now that I have an iPod, the restriction is annoying but trivial. As much as I’d like to see Apple open its standards, it doesn’t seem to be necessary right now. I purchased an iPod, and I was adamant about not paying the extra $100. Apple is doing something right.
That makes this statement interesting:
Hilary Rosen, the former chairwoman of the Recording Industry Association of America, agrees on that point. “If Apple opened up their standards, they would sell more, not less,” she said. “If they open it up to having more flexibility with the iPod, I think they’d sell more iPods. On the other hand, I don’t think it’s their fault that nobody else has come up with something great” to compete.
If the sun comes out tomorrow, it’ll be light. If it doesn’t come out tomorrow, it’ll be dark. What kind of idiotic statement is that? While Ms. Rosen does acknowledge that Apple “invented a better mousetrap”, she wants to believe that they should give away that advantage. Why? To sell more iPods? That logic is ridiculous. Considering it comes from a former representative of the RIAA, I’m not surprised. In not opening its standards, Apple is “reacting” to consumer demands. As long as iPods outsell other mp3 players 4-to-1, Apple’s executives have no legitimate reason to change their strategy. I’d entertain the idea that it’s not a viable long-term strategy, considering what happened to the Mac in the late ’80s, but for now, I see few flaws. Ride what works.
Finally, consider Sony BMG’s strategy for gaining an advantage:
Sony BMG in particular has taken steps that may apply pressure to Mr. Jobs to make Apple’s software compatible with that of other companies. The company has issued dozens of new titles – including high-profile CD’s from the Dave Matthews Band and the Foo Fighters – with software to limit the number of copies that can be made from the disc.
The software is compatible with Microsoft’s music software, but not Apple’s, and as a result music from those Sony BMG albums cannot be transferred to iPods that are hooked up to Windows-based PC’s. EMI has been test-marketing similar software with a handful of titles.
Those albums must be labeled. If I buy an album with that nonsense on it, I will be angry. I have complete faith that hackers will produce software to break the security scheme, just like the pointless DVD regional codes, but I shouldn’t have to go to such extremes to use my music in a manner most convenient to me. Stupid.